FCC Shields ISPs from Directly Paying Regulatory Fees

WASHINGTON, September 8, 2024 – Cable TV, satellite TV, broadcasters, and phone companies all need to chip in fees to cover the Federal Communications Commission's $390.1 million budget for the current fiscal year.

Once again, broadband Internet Service Providers as a distinct group will be exempt from paying fees directly – over the strong objections of state and national broadcast associations concerned about the overall fairness of the agency's fee regime.

On Friday, the FCC issued an order that allocated the fee burden among at least two dozen regulated entities, from space stations and earth stations to submarine cable landing licensees and microwave systems.

Pay-TV providers – a category that includes cable, satellite, and IPTV operators – need to pay $1.27 per subscriber, with the FCC expecting these fees to generate about $63.5 million, or 16% of the budget. The fees will be due within a matter of weeks.

In the past few years, the National Association of Broadcasters and many state associations have asked the FCC to create a single fee category for broadband service providers, claiming ISP fees would offset fees that radio and TV stations contribute.

In rejecting broadcasters, the FCC said that many ISPs already pay fees on other services that they provide, such as pay-TV and wireless service, and that supervision of those services involved multiple bureaus within the agency.

"We are unconvinced that a broadband Internet access service provider regulatory fee category is necessary or that such a category appropriately belongs in any one bureau," the FCC said.

FCC Commissioner Brendan Carr, a Republican, issued a partial dissent that called on the agency to become more efficient and less cumbersome in allocating fees, though he did not address the broadcasters' issue directly.

"The FCC is not going to make everyone happy. More often, regulated entities walk away with the feeling that they are being compelled to pay for the red tape that they will confront down the road," Carr said.

The FCC's order disagreed with broadcasters' that a broadband service provider category would result in lower fees for radio and TV stations, which are calculated in part on the number of full-time FCC employees staffing a relevant bureau – in the case of broadcasters, the Media Bureau.

"Adding a new broadband internet access fee category or categories would be unlikely to change the number of Media Bureau [full-time employees] devoted to broadcast issues," the FCC said.

The FCC did not indicate if it knew the number of pure-play ISPs that would need to pay regulatory fees or the revenue these ISPs would generate if it had adopted the broadcasters' approach.

Nor did the FCC address in specific terms the broadcasters' claim that broadening the fee base to include broadband ISPs would make for a more fair and sustainable regulatory fee system.

"Creating a new regulatory fee category for broadband Internet access services appears to be redundant with existing fee categories in the case of those broadband Internet access service providers that otherwise already were subject to the existing fee categories," the FCC said.